The Impact Of Policy Uncertainty On The Dynamic Adjustment Of Enterprise Capital Structure

Capital is the basis for enterprises to carry out production and management activities.Capital and its proportional relationship constitute the capital structure of enterprises.Changes in capital structure will cause changes in the comprehensive capital costs and corporate values.Many factors of the enterprise itself and external factors affect the enterprise capital structure.Nowadays,the market is complex and changeable.Uncertain events such as the Brexit,Sino-US trade war,and India-Pakistan issues will affect social stability and economic development,which will have a certain impact on corporate decision-making.Therefore,it has theoretical and practical significance to study the relationship between policy uncertainty and the dynamic adjustment of enterprise capital structure.Firstly,this paper reviews and summarizes the general theory about policy uncertainty and the dynamic adjustment of enterprise capital structure,then points out that existing research ignores policy uncertainty,which has an impact on the dynamic adjustment of enterprise capital structure.Secondly,this paper uses data from 2007 to 2017 China's A-share listed companies,empirically tests the relationship between policy uncertainty and the dynamic adjustment of enterprise capital structure.The results show that the policy uncertainty will slow down the adjustment speed.Over-indebted enterprises,non-state-owned enterprises and enterprises located in slow economic development areas are greatly affected by policy uncertainty;Policy uncertainty can affect the adjustment speed through financial friction and real option channels,over-indebted enterprises are greatly affected by the financial friction channel,and non-state-owned enterprises are more affected by the real option channel.Finally,this paper proposes measures to optimize the dynamic adjustment of enterprise capital structure:(1)For the government,it must maintain transparency and stability of macroeconomic policies.And it is necessary to raise the level of capital supply,broaden the financing channels,and form a healthy market environment;(2)For the enterprises,they should improve the awareness of risk management and maintain the flexibility of capital structure.They also need form multiple financing channels and reduce the adjustment cost of enterprise capital structure to promote the healthy development of enterprises.